A daily benchmark interest rate, published by the Federal Reserve Bank of New York, that measures the cost of borrowing cash overnight against Treasury securities.
SOFR is one of the indexes lenders use to set floating rates on commercial loans. The New York Fed describes it as a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, calculated as a volume-weighted median of repurchase agreement trades. It publishes the rate on its website each business day at about 8:00 a.m. Eastern time.
Because the daily rate moves, loans rarely use it raw. Notes name a version, such as a 30-day average of the daily rate or a 30-day term rate. Fannie Mae’s adjustable rate multifamily loans, for example, use 30-Day Average SOFR and adjust every month. SBA lets 7(a) lenders use SOFR as an alternative base rate; its loan manual says lenders may use their own SOFR reference rates of 30 days or less, with the total rate still capped by reference to prime.
For a borrower the working rule is rate equals SOFR plus spread, subject to any floor. Floating rate loans from banks and non-bank lenders may be quoted this way. Check which version the note names and how often it resets.
How it shows up in the data here
Not a field here, and this site does not print a current level for any index. The New York Fed publishes SOFR each business day. What this site shows is rates on loans made: loan comps prints the median reported rate by lender for multifamily loans. A SOFR quote is an index plus a spread, so ask for both, and for which version of SOFR the note names.
Go further
- Multifamily loan comps: Multifamily loans made, with median reported rate and term by lender.
- SBA 7(a) payment calculator: Monthly payment on a 7(a) loan from terms you enter.
- SBA 7(a) payment calculator: Monthly payment with the FY2027 upfront guaranty fee, with the fee paid in cash or added to the loan.
- How bankers evaluate a commercial loan deal: A credit officer asks one question five ways: how will this loan be repaid, and what happens if it is not? Knowing the five tests lets you size a request before you send it.
Related terms
- Spread (margin over an index): The fixed number of percentage points a lender adds to an index, such as prime or SOFR, to set a loan's interest rate.
- Prime rate: A base rate banks post for pricing short-term business loans. The Federal Reserve reports it as the rate posted by a majority of the 25 largest U.S. commercial banks.
- Adjustable rate loan: A loan whose interest rate resets on a schedule to an index, such as prime or SOFR, plus a fixed spread, so the payment can rise or fall over the term.
- Rate floor: The minimum interest rate a variable rate loan can charge. When the index plus the spread falls below the floor, the borrower pays the floor.
- Fixed rate loan: A loan whose interest rate is set at closing and does not change for a stated period, often the whole term, so the principal and interest payment stays the same.
- Bridge loan: A short-term loan that carries a newly built or newly bought commercial property until it is leased and earning enough to be sold or refinanced with a permanent loan.
Sources
- Federal Reserve Bank of New York, Secured Overnight Financing Rate Data, retrieved .
- SBA SOP 50 10 8.1, Appendix 18, 7(a) Interest Rate Requirements (Base Rate, Alternative Base Rate, Allowable Spread, and Frequency), effective .
- Fannie Mae Multifamily Guide, Part III, Chapter 11, Section 1101, Structured ARM Loan description (Index), retrieved .
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.